Yahoo! Beats Despite Revenue Dip

Updated with details from Yahoo!'s post-earnings conference call

Internet giant Yahoo! ( YHOO) beat analysts' revenue and earnings estimates in its second-quarter results, despite seeing its sales dip 13% compared to the same period last year.

The Sunnyvale, Calif.-based firm posted revenue of $1.57 billion, down from $1.8 billion in the same period last year, but well above analysts' forecast of $1.14 billion.

Yahoo!'s profit, however, grew, and the firm reported earnings of 10 cents a share on net income of $141 million, up from 9 cents a share and $131 million in the prior year's quarter. On a non-GAAP basis, Yahoo! earned 16 cents a share on net income of $229 million, compared to 16 cents a share and $225 million in the same period last year. Analysts had been expecting earnings of 8 cents a share.

"Even in this challenging economic environment, Yahoo! had a solid quarter, reflecting the strength of our offerings for our users and advertisers," said Tim Morse, the Yahoo! CFO, in a statement.

AT&T and Yahoo! Need New Mojo

Yahoo!, which launched a new homepage Tuesday, is currently locked in a battle with rival Google ( GOOG) to win Internet hearts and minds.

"Our new homepage is a perfect example of our efforts to create innovative products aimed at increasing user engagement while offering the most compelling advertising proposition in the industry," said Yahoo! CEO Carol Bartz in a statement.

For the third quarter, Yahoo! expects revenue between $1.45 billion and $1.55 billion, well above analysts' forecast of $1.17 billion.

Bartz, who took over from Yahoo! founder Jerry Yang earlier this year, struck a bullish tone during a conference call to discuss the results.

"Overall, we're seeing less fear in the marketplace, and advertisers are planning their spending more actively," she said.

However, she said that it was too difficult to say when the economy will rebound. "We will leave the economic predictions to others," she added.

Also during the call, CFO Morse said that Yahoo!'s overall page views grew 7% in the quarter. "We saw spikes in traffic around significant news events in the quarter," he said.

As expected, Yahoo!'s Owned and Operated (O&O) search business declined year over year, falling from $1.02 billion to $858 million.

Investors will be on alert for any hints that the firm is planning a search deal with Microsoft ( MSFT)

Last year, Microsoft launched a $47.5 billion bid for Yahoo! that ultimately collapsed, although there is growing speculation that the firms will now reach some form of search deal.

Despite its solid second-quarter results, shares of Yahoo! dipped 52 cents, or 3.1%, to $16.23 in extended trading.

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